Four Things We’re Hearing
- Online savings accounts revive
- Card originations reach decade high
- Credit card portfolios are healthy
- Marketing spend at pre-pandemic levels
A three-minute read
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Online Savings Accounts Revive
- After several years of declining savings account rates, APYs have reversed course, rising .20% - .25% in the past three months
- Consumer interest has correspondingly increased with online search volume for "savings account" rising in the past six months
- Epic recently surveyed 1,179 consumers to assess their attitudes regarding high-yield savings accounts
Card Originations Reach Decade High
- The May 30, 2020 Epic Report highlighted the dramatic effect of the pandemic on credit card direct mail volume
- New card acquisition has since fully recovered, and 229 million credit card accounts were opened in Q1 2022, higher than pre-pandemic levels
- Online search activity for the keyword “credit card” has also trended upwards since Q4 2021
Credit Card Portfolios are Healthy
- The decline in card balances has reversed due to a combination of lower consumer paydown rates and increased spending
- April's bankcard delinquency rate of 1.58% is lower than the April 2021 level of 1.67%
- Following the relatively benign card asset quality environment of the past two years, Credit Suisse predicts a return to pre-pandemic credit loss rate levels by 2023
Marketing Spend at Pre-Pandemic Levels
- The Epic Marketing Intensity Index (“EMII”), which measures financial services acquisition spending in the direct mail and online channels, shows that total spending has finally reached 2019 levels
- Recent data from Comperemedia shows direct mail returning as the most prevalent channel for receiving new credit card offers, with the digital channel dominating applications
- Consumer interest in personal loans for receiving new credit card offers, was rather sluggish during the pandemic, however recent months have seen a spike in online search activity
- Although personal loan direct mail volume also recovered at a slower pace than credit cards, it too has recently increased with Q1 2022 up 56% from Q1 2021
Quick Takes
- As noted in previous newsletters, paper shortages will impact mail volumes to some degree throughout 2022 – did you know that part of the issue was a union strike in Finland that closed paper mills and especially affected envelope production? The good news is that the strike is over!
- BNPL News
- Klarna
- Klarna, the Swedish BNPL company, and Europe's most valuable startup with a recent $46 billion valuation, is raising up to $1B in new funding at a valuation in the "low $30-billion-range" – one third lower than the prior valuation
- Klarna also announced it will lay off 10% of its staff
- Affirm
- Debit+, a new Visa debit card from Affirm, allows consumers 24 hours to split eligible purchases into an interest-free loan repayable within four installments due every two weeks
- Early results show the card fares best with Walmart shoppers buying groceries
- First mortgage interest rates have recently jumped to levels in excess of 5% from the previous 3% range
- First mortgage originations in Q1 2022 were down 44% from Q1 2021
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Thank you for reading.
Jim Stewart
www.epicresearch.net
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